UK: CPI to slip to 2.8% in February - TDS

Analysts at TDS are in line with consensus in looking for UK CPI to slip from 3.0% to 2.8% y/y in February, but underlying that, they look for a bit more underlying strength in core inflation and expect core CPI to come in at 2.6% y/y (mkt 2.5%).

Key Quotes

“February was characterised by colder than normal weather, and we've noticed a correlation between months with colder weather and stronger than normal core inflation readings. At 2.8% y/y, this leaves headline CPI a tenth below what the BoE had forecast in the Feb IR, but this is likely entirely an energy price story as the February IR projections would have been compiled at the time that crude oil prices were still up around $70bbl. So this should make no real difference to the underlying story.”

“EUR: We're looking for about 5pt drops in both components of today's German ZEW survey for March, leaving us a touch below consensus for expectations and the current situation.”